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EARLY MORNING BID EUROPE - Waiting for Nvidia to complete the next leg of AI rally
Rae Wee gives us a look at what the future holds for European and global markets. The?session began in Asia with a muted tone, as stocks drifted ahead of Nvidia’s upcoming?earnings, where high expectations are being placed on the artificial intelligence darling. Alibaba's $10.2 billion sale of shares at a steeply discounted price to fund its AI plans and Samsung Electronics disappointing shareholder-return program in the previous session weighed on technology shares. A roughly 45% drop in?the share price of Unitree after a five-fold increase on its Shanghai debut triggered concerns over bubble risk, retail investors losses, and flaws within the IPO system. The shares of China's most-known humanoid robotics manufacturer were mostly flat on Tuesday after days of declines following its listing. It is up to Nvidia now to drive the next leg in the AI rally. This is because of its role as a bellwether of the broader AI ecosystem, which includes chipmakers and companies that finance the rapid expansion of datacenter capacity. Oil prices are also falling after the U.S.'s threat of an "economic D-Day," or a wave of sanctions against Iran, turned out to not be as serious as they had hoped. The U.S. announced on Monday a new round of sanctions to 'cut off Iran’s economic lifeline.' However, it stopped short of the harshest measures and instead warned the world not to do business with the Islamic Republic. Tehran has promised to retaliate and expressed confidence that major trading partners will resist Washington's pressure. Investors are watching for a series of data releases this week from Europe, including German GDP data and the German Ifo Survey on Tuesday. These could provide insight into the cost to the economy of higher energy prices over a longer period. Key developments on Tuesday that may?influence the markets: - Germany's GDP, Ifo survey – Reopening 2-year German Government Debt Auction - Reopening 7-year UK Government Debt Auction Confidence of U.S. consumers according to the Conference Board Thomas Barkin, President of the Federal Reserve Bank of Richmond (Editing: Saad Sayeed).
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Oil prices rise as investors assess the impact of US sanctions on Iran
The oil prices rose on Tuesday, after falling more than 2% the previous session. Investors were evaluating the impact of a new 'U.S. Sanctions?against Iran. Brent crude futures were up 27 cents or 0.3% to $92.44 per barrel at 0330 GMT. U.S. West Texas Intermediate crude rose 37 cents or 0.4% to $85.38. Both contracts settled lower Monday. U.S. crude fell to a new one-week low as profit taking took place after the prices had risen over the past two weeks. The market is not fazed at all by Washington's efforts to tighten economic pressure against?Iran. Traders see the U.S. push to nudge trading partners away from Iranian products as marginal and not market-moving. U.S. Treasury secretary Scott Bessent announced on Monday an expansion of sanctions in order to cut off Iran’s economic lifeline and force a?end to the war between the two countries. He told the countries that they must cut their business ties, or risk being cut from the dollar-based system. He refused to reveal the names of the countries targeted, or the date that the penalties would go into effect. Instead, he said he would give them some time to comply with the new directive. Although U.S. Secretary of Defense Pete Hegseth stated on Monday that the U.S. will not rule out the use of military force against Iran the country has turned to more economic coercion which analysts say removed concerns about Middle Eastern oil supplies being threatened by the war. Tim Waterer is the chief market analyst for KCM. He said that markets appear to be pricing in economic pressure as being a less-risky path for physical supplies than kinetic actions. This was why initially, oil moved lower rather than spiked higher. He warned that "Iran retains the capability to respond by disrupting the shipping, which continues a residual premium on the oil price." The United Kingdom Maritime Trade Operations highlighted 'those threats when an oil tanker, struck by an unknown projectile on Tuesday, was disabled and was located about 9 nautical kilometres (16,7 km) northeast from?Oman?s Ash Shishah. Iran still maintains that it should control the Strait of Hormuz. Before the start of the war in February, the Strait of Hormuz carried about 20% of the world's oil. It named 45 tankers who had violated its rules for crossing the Strait of Hormuz on Monday and threatened to take action, including seizing their cargo. Supply disruptions caused by the U.S. and Israeli war against Iran, which began on February 28, have led to countries reducing their 'commercial and strategic reserves. The Department of Energy announced on Monday that crude oil stocks in the U.S. Strategic Petroleum Reserve dropped by 3.7 million barrels, to 289.7 millions barrels, last week. This is the lowest level since November 1982. Ishaan Lerh and Jeslyn Arora reported from Bengaluru, and Christian Schmollinger edited the story in Singapore.
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Investors await US inflation data as gold retreats from its three-month high
The gold price fell?on Tuesday, after reaching its highest?levels? in more than three month earlier that day. Investors' attention shifted towards upcoming U.S. data on inflation and Kevin Warsh's speech this week. As of 0334 GMT, spot gold was down by 0.2%, at $4,640.39 an ounce. U.S. Gold Futures remained steady at $4,696.00. Tony Sycamore, IG's market analyst, said: "We expect gold dips to be supported by buyers who are looking for gold. We also expect gold to move up towards the next resistance level at $4,900/$5,000." The U.S. Treasury Department announced that it would double its liquidity support buyback operation for longer-dated bonds and notes. Prices rose sharply in the last week. The announcement sparked currency debasement concerns. "These U.S. -dollar devaluation fears should see 'gold' well supported in the coming week, as the Fed is not sending a clear message it is prepared to fight higher inflation," TD Securities stated in a report. The risk rates may eventually rise, as crude oil grinds higher. Gold is often viewed as an inflation hedge. However, high rates can reduce its appeal because it is not a yielding asset. The Fed Chairman Warsh’s inaugural speech at this year's annual?Jackson Hole Conference has gained added importance as traders and analysts seek guidance on the recent rise in bond yields, and to reassure their independence from the Trump Administration. The U.S. The Personal Consumption Expenditures Report, the Fed’s preferred inflation indicator, is due Wednesday. Iran has vowed to respond in kind to the U.S. economic sanctions Washington claims will cut off Tehran's lifeline. Silver spot fell by 1.3%, to $68.01 an ounce. Platinum lost 1.2%, to $1853.85; and palladium dropped nearly 1%, to $1345.26.
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Japan does not plan to release crude oil from its national reserve during September and October
Ryosei Akazawa, Minister of Economy, Trade, and Industry, said that Japan will not release any more crude oil in September or October. He said that the amount of crude oil purchased in September will be about 80% less than the average monthly volume last year. This is because tankers which would normally travel through the Bab el-Mandeb Strait, are now being rerouted to the 'longer Suez route. Akazawa, a Japanese?press officer, said that Japan expects the August purchase to be the same as last year, but the September?volumes are expected to decline. This is because shipments via Suez take 55 days to arrive in Japan compared to 21-23 days via the Bab el-Mandeb Strait. * "Of those national reserves that have already been released, a portion has not been used due to the progress made in securing alternate supplies. Akazawa stated that using?that part would provide crude oil supply equivalent to a typical month in the past year. He added that Japan expects crude oil purchases to return to the average monthly levels of last year in October. (Reporting and editing by Kate Mayberry; Yuka Obayashi)
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Gold reaches its highest level since mid-May, as purchasing momentum builds
Tuesday's gold price hit a?higher than three-month high, continuing a rally that was?driven by?the recent announcement of the U.S. Treasury buyback. Investors are now focusing on key inflation data, and an upcoming speech from Federal Reserve Chair Kevin Warsh. As of 0146 GMT spot gold was up 0.4% to $4,668.19 an ounce after reaching its highest level since May 14, earlier in the session. U.S. Gold Futures increased 0.6% to $4724.50. Tony Sycamore, IG's market analyst, said that gold has continued to rise, and the return of?debasement trading last week has fuelled the latest leg of gains. He said: "We expect gold dips to be supported by buyers who are looking to see gold move towards the next resistance level at $4,900/$5,000." The U.S. Treasury Department announced that it would?double the size of liquidity support buyback operations for longer-dated notes and bonds. Treasury Department announced that it would "double the size" of its liquidity support buyback operations on longer-dated bonds and notes. The announcement sparked currency debasement concerns. TD Securities stated in a report that "these U.S. Dollar debasement concerns should see gold well supported in the coming week, as the Fed is not sending a clear message it is prepared to fight higher inflation." Gold is often regarded as a hedge against inflation, but high interest rates can reduce demand for bullion by increasing the cost of holding this non-yielding investment. Fed Chairman Warsh’s inaugural speech at this year’s annual Jackson Hole conference has gained in importance as traders and analysts seek guidance on the recent rise in bond yields, and to reassure themselves of his independence from Trump’s administration. The U.S. The Fed's preferred inflation indicator, the Personal Consumption?Expenditures Report, is due Wednesday. Iran has promised to respond geopolitically against the 'expanded U.S. sanctions, which Washington said would cut off Iran’s economic lifeline. Tehran expressed confidence in the ability of major trading partners to resist pressure. Silver spot gained 0.3% per ounce to $69.16, platinum gained 0.4% to 1,883.93, and palladium rose 0.2% to $1359.00.
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Asia shares drop on tech nerves, oil prices slip
Asia shares fell on?Tuesday, while oil prices continued to fall after the U.S.'s threats of an "economic D-Day," or sanctions against Iran, turned out to be a damp-squib. U.S. Treasury Yields are 'off their recent highs after a report that Treasury Department?might tap its cash account to fund increased debt buybacks. This could reduce the requirement for additional short-term bill sales. Investors are well aware of the high expectations that Nvidia will have to meet. Analysts expect quarterly revenues to nearly double, to $92 billion. Full-year earnings are expected to range between $103 billion and $105 billion. "These are high expectations that must be met," said Fabien Yips, a market analyst with IG. "Judging by Nvidia's past performance, it will not be surprising if the company meets the headline figures. But I think that the most important thing is to try and understand if there are any concerns about the circular deals driving its growth, or a question of whether the growth percentage in the next quarters is sustainable." MSCI's broadest Asia-Pacific index outside Japan fell 0.5%. Japan's Nikkei dropped 0.9%, and South Korea's Kospi plunged 2.7%. Alibaba's $10.2 billion sale of shares at a steeply discounted price to "fund" its AI ambitions and Samsung Electronics' disappointing shareholder-return program also weighed on the tech sentiment. Nasdaq Futures fell 0.08%, while S&P500 Futures were unchanged. EUROSTOXX?futures were 0.05% lower. SANCTIONS & BUYBACKS The Trump administration issued a warning on Monday to countries that they must cut off their business relations with Iran, or else face secondary sanctions. This was part of an "economic D-Day" which the Trump administration referred to as such. However, the Treasury Department did not impose any penalties. Brent crude futures fell by 0.1% on Tuesday to $92.08 per barrel. U.S. crude climbed 0.1% to $85.09 a barrel, both measures falling more than 2% over night. Joseph Capurso is a strategist with the Commonwealth Bank of Australia. He said: "We don't expect China, Iran's biggest trade partner, to give in to U.S. demands to stop commerce with Iran." The U.S. campaign against Iran threatens the trade truce that the U.S. has with China before the next leaders' meeting. The threat of being cut-off from the dollar-based system fuelled rumours about some countries and their banks needing to buy dollars as a precaution, thus lending support to greenback. The U.S. dollar extended gains against its Canadian counterpart and last stood at C$1.3844 after a rise of more than 0.5% overnight. The?U.S. dollar continued to gain against its Canadian counterpart, and stood last at C$1.3844 following a rise of over 0.5% overnight. Donald Trump, the U.S. president, threatened on Monday to increase U.S. tariffs starting January 1 on all Canadian cars, trucks, and automotive parts?to 50%. This escalated a trade war after negotiations broke down last week. The euro has slipped from its?three-month peak and bought $1.1668 last, while the pound sterling gained 0.06% at $1.3638. Investors will be watching the Federal Reserve Chair Kevin Warsh’s speech on Friday in Jackson Hole Wyoming. They are hoping to get some clarity on U.S. Interest Rates. Standard Chartered analysts stated that "fiscal uncertainty is unlikely to fade anytime soon... but there is scope for the Warsh led?Fed, to ease some monetary policies uncertainties by clarifying their reaction function - specifically how long they are willing to hold rates to see inflation returning to its 2% goal." All eyes will be on the Jackson Hole address by Chair Warsh for a sign, if not a forward-looking guidance. Spot gold rose 0.5% to $4,675.51 per ounce.
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Oil prices stable as investors assess impact of US sanctions on Iran
Investors weighed the impact of the new U.S. sanctions against Iran, which are more severe, on the oil prices. Brent 'crude 'futures were down by 9 cents or 0.1% at $92.16 at 0104 GMT. Meanwhile, U.S. West Texas Intermediate crude oil was up one cent at $85.02 a barrel. Both contracts dropped more than 2% Monday, with U.S. Crude Oil falling to an all-time low after the price had risen over the past two weeks. U.S. Treasury secretary Scott Bessent announced on Monday an expansion of sanctions in order to cut off Iran’s economic lifeline and force a ceasefire between the two countries. He told?countries that they must cut their business ties, or risk being excluded from the dollar-based system. He refused to reveal the names of the countries targeted, or the date that the penalties would come into effect. Instead, he said he would give them time to comply with the new directive. Although U.S. Secretary of Defense Pete Hegseth stated on Monday that the U.S. will not rule out using military force against Iran. Tim Waterer is the chief market analyst for KCM. He said that markets appear to be pricing in economic pressure as being a less-risky path for physical supplies than kinetic actions. This was why initially, oil moved lower, rather than spiked higher. He warned that "Iran retains the ability to respond through disruption of shipping, which keeps a residual premium on the oil price." The United Kingdom Maritime Trade Operations?said that an oil tanker struck by an unknown?projectile on Tuesday, about 9 nautical mile (16.7 km), northeast of Oman’s Ash Shishah was disabled. Iran still maintains that it should control the Strait of Hormuz. Before the February war began, the Strait of Hormuz carried cargoes equivalent to?about 20% of the global oil consumption. It named 45 tankers on Monday that had 'broken its rules for crossing the strait, and threatened to take action against them up to and including confiscating their goods. Supply disruptions caused by the U.S. and Israeli war against Iran, which began on February 28, have led to countries reducing their commercial and strategic reserves. The Department of Energy announced on Monday that crude oil stocks in the U.S. Strategic Petroleum Reserve dropped by 3.7 million barrels, to 289.7 millions barrels, last week. This is the lowest level since November 1982. (Reporting by Ishaan Arora in Bengaluru; Editing by Christian Schmollinger)
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Russell: Iran's response to D-Day sanctions is crucial.
Scott Bessent, U.S. Treasury secretary, invoked the 1944 D-Day landings of Allied forces in?France when announcing sanctions against Iran. The measures taken are superior to the much less successful Anzio Beachhead landing in Italy, which was another amphibious landing during World War II. Anzio was a battle that began with a successful landing of the Allies, but a lack of leadership led to the campaign stalling and turning into a long campaign of attrition. Bessent’s new measures are designed to choke Iran economically. They target companies and countries that do business with Iran in five different sectors: digital assets, technology and gold, aviation, and shipping. Bessent, rather than go for broke upfront, is warning countries that they must work with the United States to maintain access to the global financial system based on the dollar. The new measures are therefore more of a danger than they are a reality. Even if these plans do come to fruition, there is doubt as to whether or not they are severe enough to force the Iranian rulers to surrender. Or if they will even be effective in forcing a desperate Iranian population to rise up and successfully overthrow its clerical leaders. Iran has shown its ability to get around sanctions by setting up front companies and working closely with allies like China. Beijing is unlikely to agree to any U.S. sanction, so Bessent will have to be prepared to impose measures on Chinese refiners and shippers, traders and banks. This may be a level that Washington would be reluctant to pursue. The new sanctions confirm that a diplomatic resolution to the Iran conflict remains a "distant" option. They also reinforce the belief of the Trump administration that some sort of victory is still achievable. History teaches us that when both sides are confident they can still win a war and believe time is on their side then the conflict will continue. IRANIAN RESPONSE How Iran reacts will determine the future of energy markets. Iran's social media messages have been aggressive, but it has not yet renewed missile and drone attacks against energy and other infrastructure within Gulf nations that host U.S. bases such as Kuwait and Qatar. Tehran also hasn't been able fully to close the Strait of Hormuz. While there's some disagreement over the volume of crude that moves through the narrow waterway the important thing is it isn't zero. Every barrel that passes through lessens Iran’s leverage. Iran also feels the pain of the U.S. port blockade, which is far more effective than sanctions. According to Kpler, data from commodity analysts shows that Iran exported 1.75 million barrels of crude per day in the three-month period leading up to U.S. and Israeli attacks on February 28. The crude oil demand has fallen to 255,000 bpd, from 893,000 in July. This is even lower than the 259,000 bpd of May, the lowest level since May 2020. Bessent and Trump have a problem because the more effective their economic and blockade sanctions are, the more Iran is compelled to retaliate with all the military weapons it has at its disposal. If Iran's leadership sees itself in an existential struggle, it is unlikely that they will accept being economically throttled and not try to take back the initiative by attacking infrastructure and vessels throughout the Gulf. Crude oil prices will likely remain high due to the uncertainty surrounding Iran's reaction. Brent futures, the global benchmark, fell 2.4% to $92.17 per barrel on Monday after Bessent announced his decision. This is still 31% more than the $70.14 per barrel that they dropped to in the short ceasefire between Iran and the U.S., which lasted mid-June through early July. You like this column? Check out Open Interest, your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, who is also an author. (Editing by SonaliPaul)
Copper prices fall as dollar rises and new supply problems are outweighed
The copper price fell on Tuesday due to a stronger?dollar, and the macroeconomic climate, which overshadowed new fears about supply shortages triggered by withdrawal requests at the London Metal Exchange (LME).
By 0301 GMT, the benchmark three-month copper contract on 'the 'LME had fallen 0.41% to $14,214 per metric tonne. The Shanghai Futures Exchange's most traded copper contract edged up 0.17% to 107 930 yuan (16,051.93) per ton.
Red metal was also weighed down by the'stronger dollar', concerns about interest rates, and a cautious economic outlook.
This is a reversal from Monday's gains, which were a result of a large increase in LME Copper warrant cancellations - meaning that metal was marked?for storage withdrawal - and "stoked new concerns about supply shortages," Daniel Hynes said, senior commodity analyst at ANZ.
The dollar index was up by 0.08%. A stronger dollar can weigh on greenback-denominated commodities ?by making them more expensive ?for buyers using other currencies.
Concerns about rising interest rates in the United States have been raised by concerns over tariffs and an apparent deadlock in negotiations to end the Middle East conflict.
According to CME's FedWatch, traders were pricing in 42% of a rate increase at the U.S. Federal Reserve meeting on September, up from 36% one week prior.
Interest rates that are too high can dampen economic activity, which in turn affects growth-dependent materials such as copper, which is used for power and construction.
The gloomy conditions also helped Aluminium shrug off the news that a Russian aluminium manufacturer?Rusal had suspended exports of 600,000 tons per year alumina from its refinery in Guinea due to a derailment.
The LME fell by 0.67% and the SHFE dropped by 0.21%.
Zinc fell?0.37% among other?LME Metals. Lead dipped by 0.08%. Nickel dropped by?0.48%. Tin lost 0.44%.
The SHFE showed that zinc gained 0.17%. Lead dropped 0.34%. Nickel lost 0.75%. Tin lost 0.47%.
(source: Reuters)